The Source mall in Westbury is slated to be sold and could be demolished to make way for a mixed-use project, according to a leasing agent for the property.
The mall, which currently carries an unpaid loan balance of $124 million, according to Trepp LLC, a Manhattan-based tracker of commercial mortgage-backed securities, will be sold by lenders, said Jeremy Isaacs, a leasing agent for the site.
“The special servicer that has it has finally decided to put it up for sale,” Isaacs, associate real estate broker for Ripco Real Estate Corp., said at a meeting of the Long Island Real Estate Group, or LIREG, last week. A special servicer is a firm hired to handle the collection on delinquent mortgages.
Isaacs spoke to a gathering of real estate professionals at the Old Westbury Golf & Country Club on Wednesday. His comments were recorded on a video of the event posted on LIREG’s Facebook page, and confirmed by an attendee.
Isaacs didn’t respond to phone messages seeking comment.
An attorney representing the special servicer for the loan — which was originally issued in 1998, according to Trepp — didn’t respond to a request for comment.
Current retailers at the mall include P.F. Chang’s, The Cheesecake Factory and Dave & Buster’s.
Isaacs said at the meeting that the property would “probably” be demolished.
He added that a mixed-use project constructed there could support “a small amount of retail facing Old Country Road,” with residential, office or “maybe some medical” office uses.
According to Trepp loan delinquency reports, The Source property is backed by the second-largest severely delinquent loan in the metropolitan area as of October. Severely delinquent property loans include those that have gone unpaid for 90 days or more, loans that are nonperforming past their maturity date, or properties currently going through the foreclosure process, according to Trepp.
Construction on the nearly $200 million, 522,000-square-foot mall began in 1996, and adjoined the neighboring Fortunoff store.
The Source opened in 1997. The late Alan M. Fortunoff, president and chief executive of Fortunoff stores, was a driving force behind the mall, which was the first to open on Long Island in 25 years.
Fortunoff, the property’s anchor tenant, filed for bankruptcy and shut down in 2009.
The loan for The Source mall has been delinquent since March 2009, when it was marked as “non-performing beyond maturity,” a Trepp analyst said Monday. In 2012, lenders took ownership of the mall after a foreclosure auction found no buyers willing to pay to settle debts.
In 2014, Nassau Regional Off-Track Betting announced an unsuccessful plan to transform the long vacant Fortunoff store into a video gambling parlor.